GOVERNANCE AT MERCURY
YOUR BOARD OF DIRECTORS.
Tenure: First Appointed: 1 Sep 2017 (Chair since Jan 2024)
Last Elected: 19 Sep 2023
Key Skills*: M&A and capital structure; stakeholder relationships; commercial experience; people leadership.
Scott has an extensive background in investment advisory and capital markets. Scott is Chair of Fisher & Paykel Healthcare Corporation1, Chair of ANZ New Zealand and a director of ANZ Group and Next Foundation. He was formerly a director of Fonterra Cooperative Group, a member of the Capital Markets Development Taskforce and the Financial Markets Authority Establishment Board and was Chancellor of the University of Auckland. He was the Chief Executive of First NZ Capital from 2002 to 2017.
Tenure: First Appointed: 1 Sep 2023
Last Elected: 19 Sep 2023
Key Skills*: Energy industry; wholesale markets trading; commercial experience; major project investment.
Mark was CEO of Meridian Energy from 2012 – 2017 and before that spent 22 years with Fletcher Building, including 15 years as CEO of the Construction and Infrastructure division. He currently chairs Crown Infrastructure Partners and Hynds Limited and is a director of Auckland International Airport.
Tenure: First Appointed: 1 Feb 2020
Last Elected: 19 Sep 2023
Key Skills*: Natural resource management (including water and climate change); health and safety; risk management.
Hannah is an environmental scientist with a particular interest in sustainable development and resilience. Until January 2020, she was President of the Asia Pacific Region and Global Sustainable Development Leader for Golder, a Canadian global ground engineering and environmental science company. Before joining Golder, Hannah was Managing Director of New Zealand environmental consultancy firm Kingett Mitchell. Hannah has extensive background in consulting, management and board roles across various sectors including electricity, construction and water management.
Tenure: First Appointed: 1 Aug 2023
Last Elected: 19 Sep 2023
Key Skills*: Commercial experience; large organisation and cultural leadership experience; major project investment; stakeholder relationships.
Adrian has deep executive experience including 12 years at Auckland International Airport, nine of these as CEO. Before that he held senior roles across strategy, operations, product and marketing with Telecom New Zealand. Previous governance roles include acting as the New Zealand Chair of the Australia/New Zealand Leadership Forum, Chair of the NZ Airports Association and a director of North Queensland Airports and Tourism Industry Aotearoa.
*Key Skills are defined as the particular skills each director brings to the Mercury Board, and which we consider in our succession planning.
SCOTT ST JOHN CHAIR
MARK BINNS DIRECTOR
HANNAH HAMLING DIRECTOR
Scott St John will retire from the Board of Fisher & Paykel Healthcare Corporation in August 2024.
ADRIAN LITTLEWOOD DIRECTOR
YOUR BOARD OF DIRECTORS.
JAMES MILLER DIRECTOR
Tenure: First Appointed: 2 May 2012
Last Elected: 22 Sep 2022
Key Skills*: M&A and capital structure; investment analysis; audit and risk management; energy industry.
James is an experienced non-executive director and chair and an experienced chair of Audit and Risk Committees.
James is an is an experienced company director and Chair of company Audit and Risk Committees. He has specialist expertise in utility economics and 15 years’ experience in capital markets. He is currently Chair of Channel Infrastructure NZ and is a director of Vista Group, and Ryman Healthcare. James’ prior roles have included Chair of NZX, Deputy Chair of Accident Compensation Corporation and board positions with Auckland International Airport, the Financial Markets Authority and Vector.
James is a qualified Chartered Accountant and is a Fellow of the Institute of Chartered Accountants and Institute of Finance Professionals.
Tenure: First Appointed: 1 Sep 2022
Last Elected: 22 Sep 2022
Key Skills*: Large organisation and people leadership; AI; data and digitisation; customer relationships; governance.
Susan is an experienced non-executive director, board chair and chair of People and Remuneration and Audit and Risk Committees. As a business leader, Susan has helped companies to drive growth through technology, innovative customer solutions and organisational culture. She currently chairs Vista Group and is an independent director of Xero and Arvida. Susan is also an independent director of Craigs Investment Partners.
Susan was previously a member of the New Zealand Markets Disciplinary Tribunal and a past director of Trustpower, ASB Bank and Property for Industry. Susan also served on the Board of Global Women and has been a past Ministerial appointee to the National Advisory Council for the Employment of Women.
Tenure: First Appointed: 28 Aug 2015
Last Elected: 23 Sep 2021
Key Skills*: Iwi and other stakeholder relationships; natural resource management (including water and climate change); digitisation.
Mike is a leading advisor on Māori economic development and has well-established networks in Māoridom. Mike has strong commercial skills in the application of digital technologies. He is the co-founder and CEO of Takiwā Limited and a co-founder and director of Toha Foundry Limited, technology companies commercialising cloud-based geospatial analytics services. He was formerly a director of Auckland Tourism Events and Economic Development (ATEED).
Tenure: First Appointed: 1 Sep 2022
Last Elected: 22 Sep 2022
Key Skills*: Governance; commercial experience; audit and risk management; innovation.
Lorraine is an experienced director and business leader with an extensive background in the telco, technology, and ICT sectors. Lorraine currently chairs Rakon and is a director of MOVE Logistics Group1 and VWORK. Lorraine’s prior roles are as chair of audit and risk committees including Chair of the Department of Corrections Audit and Risk committee, director of Horizon Energy Group, Pushpay Holdings, Board member WREDA and director and Chair of Kordia Group.
Lorraine is a qualified Chartered Accountant and is a Fellow of the Institute of Chartered Accountants.
Skills are defined as the particular skills each director brings to the Mercury Board, and which we consider in our succession planning.
MIKE TAITOKO DIRECTOR
SUSAN PETERSON DIRECTOR
LORRAINE WITTEN DIRECTOR
1 Lorraine Witten will retire from the Board of MOVe Logistics Group in October 2024.
YOUR BOARD OF DIRECTORS.
Tenure: First Appointed: 1 May 2010 (Chair since Sep 2019)
Last Elected: 28 Sep 2021
Resigned: 31 Dec 2023
Key Skills*: Governance; commercial experience; stakeholder relationships; people leadership.
Prue is a professional director with experience across a range of industries. Formerly a commercial lawyer and partner in the national law firm Russell McVeagh for 20 years, her expertise included corporate and regulatory matters, corporate finance, capital markets and business restructuring. Prue was formerly a director of Chorus Limited, Bank of New Zealand and Chair of Queenstown Airport Corporation. Prue retired from the Mercury Board on 31 December 2023.
Skills are defined as the particular skills each director brings to the Mercury Board, and which we consider in our succession planning.
Tenure: First Appointed: 1 Feb 2014
Last Elected: 24 Sep 2020
Resigned: 19 Sep 2023
Key Skills*: Energy industry; major project investment; health and safety.
Patrick was a Mercury director in 2006-2007 before being appointed Chief Executive of New Zealand’s transmission owner and operator, Transpower, a position he held for more than six years. At the time he was a Mercury director, Patrick chaired Auckland International Airport and was a director of Transgrid. He was previously a director of NZX Limited and Essential Energy, Australia. Patrick retired from Mercury after the September 2023 Annual Shareholders’ meeting.
Prue was a director of Mercury from 1 May 2010 until 31 December 2023.
2 Patrick was a director of Mercury from 1 February 2014 until 19 September 2023.
First Appointed: 1 May 2024 (1 year term)
Key Skills*: Networked infrastructure (delivery and operation), regulation, public and private sector, cultural change, health and safety and sustainability/ climate change.
Nicole is an experienced Chief Executive and director. She is currently the Chief Executive of the New Zealand Transport Agency, Waka Kotahi and before that, Chief Executive of WorkSafe. Nicole has also held a range of Board and governance roles with Auckland Transport, The Construction Accord and in large infrastructure delivery programmes.
Her executive experience includes executive roles in Fonterra, KiwiRail, Vector and Fletcher Challenge Forests.
As a Future Director, Nicole is invited to attend and participate in Mercury Board and Committee meetings, although she does not participate in decision making.
PRUE FLACKS PAST CHAIR 1
PATRICK STRANGE PAST DIRECTOR 2
NICOLE ROSIE FUTURE DIRECTOR
GOVERNANCE AT MERCURY.
LETTER FROM OUR CHAIR.
Dear Shareholder
It is my pleasure to present our corporate governance statement for the year ended 30 June 2024.
This corporate governance statement outlines Mercury’s Corporate Governance Framework, including information about the composition, characteristics and function of Mercury’s Board, how we oversee ethical and responsible action at Mercury, our approach to risk, and inclusion and diversity.
Mercury’s directors have deep industry, governance, and business experience. The Board draws on this experience to oversee the delivery of Mercury’s goals and the setting of new ambitions to play a leading role in the electrification of the New Zealand economy.
This letter highlights some of the Board’s activity in FY24.
CONTINUED PATH OF SUCCESSION
The Board has a significant focus on succession at Mercury and in FY24 the positive impact of this focus was evident, with change at governance and leadership levels.
Prue Flacks retired as Board Chair, and I assumed the role in January 2024. Meanwhile, Susan Peterson took on the role of Chair of the People & Performance Committee.
During her tenure, Prue made an enormous contribution to Mercury’s evolution from State-Owned Enterprise to a listed company that is one of New Zealand’s largest generators and multi-product, digital retailers. On behalf of the Board, I extend my thanks to Prue.
Patrick Strange also retired from the Board during the year. Patrick made a significant contribution to Mercury over a total of 11 years as director. I thank Patrick for his service.
During FY24, Adrian Littlewood and Mark Binns joined the Board. These appointments reflect our commitment to building a Board with deep and varied experience to govern the business over the medium to longer term.
Mercury continues to participate in the Future Directors programme established by the Institute of Directors. Nicole Rosie was appointed as Mercury’s current “Future Director” from 1 May 2024.
BOARD COMMITTEE STRUCTURE
During FY24, the Board discussed reviewing our committee structure to maximise director effectiveness and efficiency in discharging Board duties. As part of this, we clarified the role of the ‘Nominations Committee’ to address governance matters beyond director nominations, such as oversight of ongoing director development and Board performance. The committee was renamed the ‘Nominations and Corporate Governance Committee’ to reflect this. Our review of the Board committee structure is ongoing. We intend to progress this during FY25 with updates to be reflected in our FY25 Corporate Governance Statement.
TRANSITION OF LEADERSHIP
Vince announced his retirement effective from the end of August 2024 and Stew Hamilton, Mercury’s Executive General Manager Generation, was unanimously appointed by the Board as the incoming Chief Executive.
Vince spearheaded significant growth over his four years at Mercury, guiding the company through a phase of renewable construction and delivery, and overseeing two major acquisitions (Tilt Renewables and Trustpower). I thank Vince for his significant contribution to Mercury.
I also extend a warm welcome to Stew in his new role. Stew has a track record of success leading large, complex businesses in New Zealand and abroad. During his time at Mercury, he has generated substantial business value while fostering lasting partnerships and enhanced health and safety performance. Stew’s appointment underscores the depth of talent at Mercury and our commitment to fostering this.
As announced in late 2023, William Meek, our Chief Financial Officer, will be stepping down in 2025. A recruitment process for a new Chief Financial Officer is ongoing and we are confident that the transition will be smooth.
CLIMATE
Climate has once again been a focus for the Board in FY24. This year Mercury has published its first mandatory climate-related disclosures in accordance with the Aotearoa New Zealand Climate Standards. This has involved a concentrated effort from the Board and the Risk Assurance and Audit Committee. Of particular focus for the Board this year was our approach to scenario analysis, the articulation of our material climate-related risks and opportunities, and our progress towards our climate targets.
CAPITAL BOND ISSUANCE
In June 2024, the Board approved the issuance of a $350m capital bond to refinance existing bonds and for general corporate purposes. The bond issue was fully subscribed, and the strong response from the market demonstrates continued long-term confidence in Mercury’s business performance and future outlook.
ANNUAL SHAREHOLDERS' MEETING
Our ASM will be held in a hybrid format again this year, with shareholders being able to join in person or remotely via video link. This approach was successful in 2022 and 2023 and Mercury is aligned with the New Zealand Shareholders' Association’s principles of maximising meaningful shareholder participation and quality engagement.
It is a privilege to lead our Board in overseeing Mercury’s role in Aotearoa New Zealand’s energy transition. The Board is focussed on facilitating the delivery of Mercury’s commitments to deliver new renewable generation for New Zealand and drive returns for our shareholders. I look forward to seeing you at our ASM.
SCOTT ST JOHN // CHAIR
CORPORATE GOVERNANCE FRAMEWORK.
This corporate governance statement has been prepared in accordance with NZX Listing Rule 3.8.1 and was approved by the Board of Mercury NZ Limited on 20 August 2024. The information contained in this corporate governance statement is current as at that date. Some information in the corporate governance statement is expressed to be current at another date, for example the FY24 balance date of 30 June 2024. This corporate governance statement reports against the NZX Corporate Governance Code dated 1 April 2023. At Mercury, we are committed to the highest standards of corporate governance, business behaviour and transparency to protect and enhance the interests of our owners. Our corporate governance framework includes robust policies and processes which are fundamental to all of Mercury’s foundational pillars. Our corporate governance framework underpins the maintenance of strong relationships with our stakeholders and our ability to create longterm value. It also ensures Board accountability to our shareholders and provides for an appropriate delegation of responsibilities to our people.
The Board regularly reviews our corporate governance policies and practices to ensure compliance with NZX and ASX standards (Mercury is an ASX Foreign Exempt Listed company) as well as reflecting positive contemporary corporate governance trends in New Zealand and Australia.
Over the reporting period, our corporate governance practices were in substantial compliance with the NZX Corporate Governance Code. The only exceptions relate to Recommendation 3.3 (Remuneration Committee), where the governance of remuneration at Mercury is split between the People and Performance Committee and the Nominations and Corporate Governance Committee (see the Board Committees section of this statement for a full explanation of this exception); and Recommendation 5.1 (Director Remuneration), where Mercury adopted a policy for director remuneration during the reporting period but did not have a specific policy for the full reporting period (see the Remuneration Report in our FY24 Integrated Report for a full explanation of this exception).
While not required due to our ASX foreign exempt listing status, we also endeavour to comply with ASX Corporate Governance Principles and Recommendations (fourth edition).
MERCURY’S BOARD.
BOARD COMPOSITION & CHARACTERISTICS
Structure of the Board
The Board typically comprises eight directors although this number may vary as required to ensure effective succession.
To enable Mercury to achieve its strategic goals, the Board strives to include an effective combination and diversity of skills, backgrounds and experiences. The Board also focuses on ensuring that its culture reflects Mercury’s values, to foster alignment with the wider business.
There is a brief bio of each director at the beginning of this section.
Chair
Scott St John is the Chair of the Board. First appointed as a director in 2017, he was appointed as Chair in 2024. Scott is an independent, non-executive director. The Chair’s overarching responsibilities are to provide leadership to the Board and to ensure the Board is well informed and effective. More information about the role of the Chair is contained in the Mercury Board Charter (found on the Corporate Governance section of our website).
Future Director
The Institute of Directors’ Future Directors Programme provides people with governance potential and ambition with mentorship and the opportunity to participate on a board. It aims to increase the next generation of boardready directors in New Zealand. The Mercury Board is a supporter and active participant in the programme, with Nicole Rosie (the current Future Director) the fifth such appointee to the Mercury Board.
Future Directors are invited to attend, and actively participate in, Mercury Board and Committee meetings, although they do not participate in decision making.
The Board is structured to ensure that as a collective group it has the skills, experience, knowledge, diversity and perspective to fulfil its purpose and responsibilities.
INDEPENDENCE
All of Mercury’s directors, including the Chair, are considered by the Board to be ‘independent’ directors, in that they are non-executive directors who are not substantial shareholders and who are free of any interest, business or other relationship that would materially interfere with, or could reasonably be seen to materially interfere with, the independent exercise of their judgement.
The Mercury Board takes director tenure into account in considering independence. The NZX recommends that issuers consider the effect of tenure on independence after 12 years’ service. The Board has determined James Miller to be independent. Mercury values the experience and deep understanding of Mercury’s business, energy markets and major capital investment which James brings to the Board. James has been on the Board since 2012, but in light of the considerable value that he provides to the Board, his ability to challenge and hold management to account and the fact that he has been Chair of the Risk Assurance and Audit Committee only since 2022, the Board has determined that James’ independence is not affected by his tenure. James intends to retire from Mercury at the end of his current three-year term following the 2025 Annual Shareholders’ Meeting.
RESPONSIBILITIES
The Board is responsible for Mercury’s strategic direction and operation and has delegated certain responsibilities to the Chief Executive and the Executive Management Team (EMT).
The Board’s responsibilities are set out in the Board Charter, which is reviewed at least every two years, and include:
Strategy and Planning
• establishing clear strategic goals with appropriate supporting business plans and resources
• monitoring strategy implementation
Environmental and Health and Safety
Financial Performance and Integrity
• ensuring Mercury’s environmental and health and safety culture and practices comply with all legal requirements, reflect best practice in New Zealand and are recognised by employees and other stakeholders as key priorities
• monitoring financial performance, effective delivery of the budget and business plan, and ensuring the integrity of reporting
Executive Authority
Risk and Audit
Ethics, Culture and Corporate Behaviour
• setting delegated authority levels for the Chief Executive and EMT
• ensuring that effective audit, risk management and compliance systems are in place and monitored to protect Mercury’s assets and to minimise the possibility of Mercury operating beyond legal or regulatory requirements or beyond acceptable risk parameters as determined by the Board
• ensuring Mercury adheres to high standards of corporate behaviour, responsibility and ethics
The Chief Executive and EMT are responsible for:
• developing and making recommendations to the Board on Mercury strategies and associated initiatives
• managing and implementing strategies approved by the Board
• formulating and implementing policies and reporting procedures for management
• decision making compatible with Mercury’s Delegations Policy
• managing business risk
• the day-to-day management of Mercury
The Chief Executive and EMT have appropriate employment agreements setting out their roles and conditions of employment.
Chief Executive and EMT performance are reviewed regularly against objectives and measures set by the Board in annual performance scorecards. The Chief Executive’s and each EMT member’s performance were evaluated during the reporting period on this basis. Further details are contained in the Remuneration Report in our FY24 Integrated Report.
MERCURY’S BOARD CONTINUED.
CONFLICTS
Mercury maintains a directors’ interests register. The interests’ register is reviewed at each Board meeting to ensure it is up to date and to determine if any directors are interested in any current or proposed transaction in which Mercury is or may become involved. If a director is interested in a transaction, this is discussed with the Chair and the Company Secretary and actively managed. A management plan is established and periodically reviewed as necessary. More details on the Board’s approach to conflicts of interest can be found in Mercury’s Board Charter. Information on current directors’ interests can be found under Directors’ Disclosures in our FY24 Integrated Report
ACCESS TO ADVICE & COMPANY SECRETARY
Directors may access such information and seek such independent advice as they consider necessary or desirable, individually or collectively, to fulfil their responsibilities and permit independent judgement in decision making. They are entitled to have access to internal and external auditors without management present and, with the Chair’s consent, seek independent professional advice at Mercury’s expense. All directors have access to the advice and services of the Company Secretary for the purposes of the Board’s affairs. The Company Secretary is appointed on the recommendation of the Chief Executive and must be approved by the Board. The Company Secretary is accountable to the Board, through the Chair, on all governance matters. As at the date of this Corporate Governance Statement, Howard Thomas is the Company Secretary.
SELECTION, NOMINATION & APPOINTMENT
All directors are elected by Mercury’s shareholders (other than directors appointed by the Board to fill casual vacancies, who must retire and stand for election at the next meeting of shareholders) with rotation and retirement determined in line with the NZX Listing Rules. The Board is responsible for considering and appointing directors to the Board after candidates have been identified by the Nominations and Corporate Governance Committee (see Board Committees).
Mercury notifies shareholders of their right to nominate a candidate for election as a director by notice on the NZX and ASX.
Where any director election or re-election is to occur at a shareholder meeting, the Notice of Meeting includes all information on candidates for director election or re-election that the Board considers may be useful to shareholders. Directors must retire every three years and, if desired, seek re-election.
Mike Taitoko, having served for three years since his last re-election, will retire at the September 2024 annual shareholders’ meeting and stand for re-election in accordance with the NZX Listing Rules.
The Board and Nominations and Corporate Governance Committee carry out appropriate due diligence before appointing a director or nominating a candidate for election as a director in accordance with our governance processes.
Mercury has a written agreement with each director set out in a letter of appointment containing the terms and conditions of their appointment. A copy of the standard form of this letter is available in the Corporate Governance section of our website. In addition, Mercury also enters into deeds of
indemnity and insurance with each director, in terms of which Mercury indemnifies and provides insurance to directors in accordance with the Companies Act 1993.
INDUCTION & DEVELOPMENT
All new directors participate in a comprehensive induction programme to familiarise them with Mercury’s business and the energy and telecommunications industries. The induction programme covers key Mercury policies and internal frameworks and includes sessions run by EMT members on their business areas and important projects happening within Mercury. New directors may request further induction training as needed.
The Board receives regular briefings on Mercury’s business operations from senior managers. Regular Board strategy days are held to consider matters of strategic importance to Mercury, and Board and management run scenario thinking sessions for key issues. Visits to Mercury’s facilities keep the Board informed of Mercury’s assets and operations and in particular with respect to health, safety and wellness matters.
The Board has an ongoing programme to enhance the effectiveness of directors. This involves both deepdives into aspects of Mercury’s business, and sessions focusing on the broader environment including future trends and innovation. During FY24 there was a session run on iwi rights and interests. Additionally, in September 2023, directors undertook a study tour across the US, UK and Europe. This included meetings with industry representatives to discuss topics such as balancing the energy trilemma, delivering on projects, emerging technologies and trends and effective business models.
Directors are also encouraged and supported to continue their own professional development through individual learning opportunities.
It is essential to Mercury that directors commit sufficient time to prepare and perform their duties properly and effectively. The Board has considered this issue during the reporting period and is satisfied that, taking into account all of their commitments, each director had sufficient time to perform their duties for Mercury.
MERCURY’S BOARD CONTINUED.
BOARD SKILLS MATRIX
Through the Nominations and Corporate Governance Committee, the Board regularly assesses its skills and competencies in the context of key outputs required, including:
• setting risk parameters for both value creation and value protection;
• cultural leadership to reflect our values, environmental kaitiakitanga and social licence to operate; and
• strategy development in an environment of disruption, requiring courage to challenge, resilience and agility to respond.
During the reporting period, the Nominations and Corporate Governance Committee has considered and reviewed the skills of the Board and updated the Board skills matrix. Recognising that how well the Board performs is a function of the skills and experience of individual directors and how the directors work together as a whole, we consider that addressing the level of skills and experience collectively is a better indicator of overall Board capability.
Although the Board fosters collaborative and open discussion and each director is expected to contribute broadly, the key skills which individual directors contribute to the Mercury Board are indicated in the director profiles. The purpose of identifying key skills at an individual level is to signal the skills which would need to be considered when a director retires. This is important for succession planning purposes.
2 The skills matrix presented here includes data for all current directors as at the date of this Corporate Governance Statement. It does not include data for Patrick Strange (left the Board on 19 September 2023) or Prue Flacks (left the Board on 31 December 2023).
Significant commercial experience across different industries and economic cycles
Major project investment and experience
Customer relationships across market segments and demographics
Governance experience, including listed companies
Partner relationships
M&A and capital structure experience
Government relationships
Finance/accounting/audit committee experience
Risk management process and experience, including cyber security, climate related, structural asset integrity
AI, automation and digitisation
Shareholder/investment community relationships
Disruption and innovation in energy and other sectors
Iwi relationships/connectivity
Climate Change and natural resource management (including water)
RETAIL
Understanding and maximising value in retail distribution networks at scale
Wholesale markets
trading (energy and/or other commodities)
Health, safety and wellbeing governance
Large organisation and cultural leadership experience
BOARD
REVIEWING PERFORMANCE
The performance of the directors (individually and collectively), and the effectiveness of Board processes and committees, are regularly evaluated using a variety of techniques including external consultants, questionnaires and Board discussion. A performance review was carried out by an external facilitator during the reporting period. A performance review led by the Chair will be carried out during the 2025 calendar year.
DIRECTORS’ MERCURY SHAREHOLDINGS
The Board encourages the alignment of directors’ interests with those of shareholders and with Mercury’s strategic aims. Non-executive directors are encouraged, within five years of their appointment, to purchase and hold Mercury shares equivalent to the non-executive director’s fixed annual base fee. Further details of directors’ shareholdings in Mercury are set out in Directors’ Disclosures in our FY24 Integrated Report
BOARD COMMITTEES
The Board has three standing committees: the Risk Assurance and Audit Committee (RAAC), the People and Performance Committee and the Nominations and Corporate Governance Committee. Each Committee focuses on specific areas of governance. Together, they strengthen the Board’s oversight of Mercury. Committee meetings are scheduled to coordinate with the Board meeting cycle. Each Committee reports to the Board at the subsequent Board meeting and makes recommendations to the Board for consideration as appropriate.
During the period, the Board discussed and clarified the role of the previously named ‘Nominations Committee’. The Committee was renamed the ‘Nominations and Corporate Governance Committee’ to more accurately reflect the Committee’s governance roles and responsibilities.
As an exception to the NZX Corporate Governance Code, Mercury does not comply with Recommendation 3.3 because it does not have a separate remuneration committee. This exception has been approved by the Board. The functions that would ordinarily be allocated to a remuneration committee are shared between the People and Performance Committee in respect of the Chief Executive and the EMT, and the Nominations and Corporate Governance Committee in respect of the directors. These responsibilities are reflected in the Committee Charters.
Each standing Committee operates in accordance with a written Charter approved by the Board and reviewed as required and at least every two years. The Committee Charters are available in the Corporate Governance section of our website.
ADDITIONAL COMMITTEES
Mercury assesses on a regular basis whether additional standing or ad hoc committees are required. Additional temporary committees are established from time to time, including as required to provide governance oversight on short-term projects. As at the date of this statement, Mercury has considered that no other standing committees are required. During the year ended 30 June 2024, the Board established one temporary committee for a discrete project. The table below details the directors that were members of that temporary committee and the number of meetings attended.
Committee Member Meetings attended
Scott St John 0
James Miller 1
Hannah Hamling
Arapuni hydro station.
Members as at 30 June 2024: At least three directors, majority independent.
Adrian Littlewood
Scott St John (prev. Chair)
Chair until 1 Jan 2024, member as Board Chair from 1 Jan 2024
Prue Flacks
Member as Board Chair until 31 Dec 2023
Membership and Meetings Membership and Meetings Membership and Meetings
Members as at 30 June 2024: At least three directors, each independent non-executives. At least one with accounting / financial background. Board Chair not eligible to be RAAC Chair.
Assisting the Board to fulfil its people and performance responsibilities relating to:
• Mercury’s People and Performance strategy and plan
• review of inclusion and diversity objectives and progress against objectives
• the remuneration and performance of the Chief Executive and EMT
• People and performance policies and practices
Monitoring and providing guidance to management on people and performance related matters.
Overseeing, reviewing and advising the Board on Mercury’s:
• risk management policy and processes (which include oversight of Health and Safety assurance and climate-related risks and opportunities)
• internal control mechanisms and internal and external audit functions
• compliance with legislation and regulation
• financial information prepared by management for publication
Management retains responsibility for the implementation and operation of adequate risk assurance, internal control and audit systems. Management only attend RAAC meetings by invitation. The Board has delegated to the RAAC the authority to oversee and monitor these activities.
Ensuring the Board and its committees are structured appropriately and composed of suitably qualified individuals to support the Board’s effectiveness in discharging its duties and responsibilities and adding value through good governance.
The Nominations and Corporate Governance Committee plays an important role in identifying, for the Board to consider, people with the necessary expertise, experience, diversity and perspectives for selection as potential directors to be nominated for election at the next annual shareholder meeting or to fill a casual vacancy on the Board.
3 There were three out of cycle People and Performance Committee meetings during the period in relation to the Chief Executive transition.
4 There was one out of cycle Risk Assurance and Audit Committee meeting during the period in relation to our FY23 climate-related disclosures.
ASSURANCE & MANAGING RISK.
AUDIT PLAN & ROLE OF AUDITOR
As a public entity under the Public Audit Act 2001, the Auditor General is the independent auditor of Mercury and each of our subsidiaries (together, the ‘Group’). The Auditor-General appointed Emma Winsloe of Ernst & Young to carry out the FY24 audit on his behalf. The NZX Listing Rules require rotation of the key audit partner at least every five years. The provision of external audit services is guided by the Audit Independence Policy available on the Corporate Governance section of our website. The external auditor attends the Annual Shareholders’ Meeting and is available to shareholders to answer questions relevant to the audit.
INTERNAL AUDIT & RISK ASSURANCE
Mercury has a comprehensive internal audit and risk assurance plan, which take a holistic view of Mercury’s culture, practices and procedures and include periodic reviews of relevant areas of Mercury’s operations. The internal audit plan is designed, updated and approved by the RAAC in consultation with the Risk Assurance Officer and the Internal Auditor (currently made up of an internal team, Deloitte and other internal audit and process specialists appointed on an outsourced basis) who report on progress and the results of internal audit reviews at each RAAC meeting. The Internal Auditor has access to management and the right to seek information and explanations.
The RAAC meets with the Internal Auditor at least once each year without management present.
During FY24, the focus of the RAAC was compliance (regulatory), reputation, financial (including climate), operational and health and safety. Assurance reviews were undertaken for the following areas: Well Integrity Management Systems, Incident Simulation, NOW’s
Compliance Framework, Cyber Security, Key Financial Controls, Wholesale Markets, Medically Dependent and Vulnerable Customers, and Treasury.
TIMELY & BALANCED DISCLOSURE
Shareholders and Markets
Mercury is committed to maintaining a fully informed market through effective communication with the NZX and ASX, our shareholders and investors, analysts, media and other interested parties. Mercury provides all stakeholders with equal and timely access to material information that is accurate, balanced, meaningful and consistent. Where Mercury provides a new and substantive investor and analyst presentation, these materials are released to the NZX and ASX ahead of the presentation.
The Market Disclosure Policy is designed to ensure this occurs in compliance with Mercury’s continuous disclosure obligations under the NZX Listing Rules. The Policy is available in the Corporate Governance section of our website.
The Board has appointed the Company Secretary as the Disclosure Officer who is responsible for administering the Policy. The Disclosure Committee (made up of the Board Chair, RAAC Chair, Chief Executive, Chief Financial Officer and Disclosure Officer) is responsible for ensuring that Mercury complies with its disclosure obligations.
The Chief Executive and EMT are responsible for providing the Disclosure Officer with all material information relating to their areas of responsibility. Information which, in the opinion of the Disclosure Officer, may require disclosure is provided to the Disclosure Committee for decision.
Disclosures relating to the annual and interim financial statements must be reviewed by the RAAC
before being approved by the Board. Once approved for disclosure, the Disclosure Officer is responsible for releasing material information to the market.
Directors consider at each Board meeting whether there is any material information which should be disclosed to the market.
Integrity of Reporting
The Chief Executive and the Chief Financial Officer are required each half year and full year to provide a letter of representation to the Board confirming that the financial statements have been prepared in accordance with legal requirements, comply with generally accepted accounting practice, and present fairly, in all material respects, the financial position of Mercury and the results of its operations and its cash flows.
A letter of representation confirming those matters was received by the Board with respect to the Group’s FY24 financial statements.
We report on non-financial information in our Integrated Report. Material environmental, social and governance matters are covered in our FY24 Integrated Report, this corporate governance statement and the Climate Statement. To provide this information in a format accessible to our stakeholders we take guidance from both the Global Reporting Initiative (GRI) standards and the International Integrated Reporting Council (IIRC) Integrated Reporting <IR> framework. We obtain an independent limited assurance opinion from Ernst & Young on our FY24 Climate Statement and Greenhouse Gas Emissions Inventory.
OUR KEY RISKS
Safety and wellbeing
Mercury undertakes activities that potentially involve significant safety risks. When we think about safety
and wellbeing risks at Mercury we focus on our 11 critical risks: driving, electricity, confined spaces, stored energy, working around water, mental wellbeing, dropped or falling objects, hazardous substances, mobile plant and equipment, working alone, and working at heights. A critical risk is something that has the potential to kill or seriously hurt our people, our partners or a member of the public.
There are several factors that can create wellbeing risk for our people and our customers. Mercury has implemented specific internal and external initiatives (e.g. a suite of staff wellbeing tools, Customer Care programme for Vulnerable and Medically Dependent customers, Here to Help programme for affordability issues) to address this risk and alleviate impacts.
Mercury operates three stations that are designated as Upper-Tier Major Hazard Facilities (MHF) which have unique safety risks beyond those found in our other generation plants. As an operator of a designated MHF, we work closely with WorkSafe and Fire & Emergency NZ and have regular contact with local councils and communities. We have a strong focus on Process Safety management and our Safety Cases demonstrate how we manage and operate safely to ensure that risks to personnel are reduced and that any potential damage to property, the environment and the community is minimised.
COMPLIANCE
Legislative and regulatory changes
Regulatory changes to the current wholesale and retail market structure and pricing regimes may affect how Mercury manages its integrated business model of generation and retailing electricity, gas and telco and could adversely impact on Mercury’s ability to create value. Legislative or regulatory changes, including Treaty of Waitangi claims and iwi-related litigation with the
ASSURANCE & MANAGING RISK
Government, changes to consent conditions, or levies on the use of natural resources, may result in Mercury facing significant direct or indirect restrictions, conditions or additional costs on Mercury’s access to freshwater or geothermal resources and its hydro, wind and geothermal generation activities.
Managing the energy trilemma (reliability, affordability and renewability) is a key challenge as the energy sector transition progresses and this in turn creates an increased risk of possible regulatory intervention as a way of impacting upon affordability.
Fuel constraints arising from reduced gas availability at times of very low hydro storage can result in high energy market volatility, resulting in financial and operational stress for many New Zealand businesses. This stress increases the risk of regulatory intervention by the Government, which has the potential to impact on Mercury’s wholesale/commercial sales and profitability.
Reputation
Our reputation with investors, partners, customers and the broader community is one of our most significant assets. In addition to the risks mentioned elsewhere in this statement, the following events could threaten that reputation and could lead to negative publicity resulting in the loss of business revenues or a reduction in Mercury’s value:
• errors in customer connections, billing or general customer communications
• errors by directors, management, contractors or related industry operators negatively reflecting on Mercury
• adverse environmental impact caused by, or perceived to be caused by, Mercury’s operations
• health and safety incidents under the operational control of Mercury
• a reduction in standards of how we treat the
communities that we operate in.
Some of these reputational risks have the potential to impact on Mercury’s social licence to operate and hence our long-term success.
OPERATIONAL
Fuel security and supply
Mercury’s generation depends upon the availability of water for hydro generation, wind for wind generation, and geothermal fluid for geothermal generation. The principal risks include the inability to generate expected levels of electricity due to either temporarily or permanently reduced fuel supplies, loss of access to supply, or increased costs to secure the necessary fuel, all of which may adversely affect Mercury’s earnings.
Supply chain
Mercury is exposed to both international and domestic supply chain risks that can impact on our ability to successfully deliver our generation development pipeline projects and major plant refurbishment programme.
Electricity market exposure
In the short run, our ability to manage our electricity portfolio risk depends upon our ability to purchase and sell electricity in the wholesale electricity market which could be impacted by:
• short-term changes in supply and demand
• national fuel availability based on hydrological and thermal conditions (including extended national drought)
• competitor behaviour
• significant reduction or ceasing of electricity consumption (e.g. by large industrial companies)
• constrained transmission and distribution
of electricity.
In the long run, wholesale prices are determined by the level of national demand relative to supply from power generation. Prices can be affected by levels of activity in the industrial sector, population size, economic conditions, competitor behaviour, generation build or retirement, technological changes or new sources of energy, and regulatory changes.
We could also be adversely impacted if a large group of customers, one or more major customers, or a New Zealand market participant were to default on payment for electricity provided or for hedge settlements.
Broadband and mobile services
Mercury now retails broadband and mobile telecommunication services to residential and commercial customers. Broadband and mobile both introduce different operational challenges (e.g. network availability, cyber-security) that if not well managed can jeopardise Mercury's capacity to supply telecommunication services to customers.
Power station availability
Our ability to generate electricity depends upon the continued efficient operation of our power stations. The viability, efficiency or operability of our power stations could be adversely affected by a range of factors including:
• catastrophic events such as a major earthquake, volcanic eruption, or other natural perils that could cause failure of one or more of our power stations
• material failure of turbines, transformers, key infrastructure or geothermal wells that results in unplanned power station outages that require replacement or repair and could be influenced by supply chain delays
• unexpected events impacting the short-term availability of key people required to operate
stations, provide hydro control or trading oversight
• cyber-attacks upon our power stations that could result in a plant failure or sustained loss of control.
Information security
We depend on many different IT systems for our continued operations. There is a risk that the security of critical systems may be compromised and/or information accessed, copied, deleted or corrupted, impacting on our ability to operate critical systems. Such an event could result in costs to resolve or repair; potential downtime of operations; potential breaches of our customers’ privacy, including unauthorised access and disclosure of their personal information; and reputational impacts from any loss of service, or resulting impacts on safety, our environment or community.
FINANCIAL Insurance
Mercury is insured through a comprehensive programme including cover for generation property, plant and equipment and business interruption with a combined limit of $1 billion. Some catastrophic events are uninsurable, or we have chosen not to insure against them as the cost of cover is prohibitive and the likelihood of occurrence is extremely rare. This is a common approach in our industry.
In the event of a severe catastrophic event, it is possible that the insurance portfolio will not provide sufficient cover, impacting future operational performance and the financial condition of Mercury. We estimate that the maximum foreseeable loss to which the Group could potentially be exposed to (cascade dam failure causing significant flooding, business interruption, direct reinstatement costs and potential loss of life) is approximately $13 billion with an assessed likelihood of occurrence of 1 in 100,000 years.
ASSURANCE & MANAGING RISK CONTINUED.
We review the level and nature of our insurance cover annually. Following a third-party risk tolerance analysis which considered several key financial metrics specific to Mercury, the decision was previously made to retain additional financial risk (e.g. deductibles, shared primary level cover, caps, waiting periods, etc.) in the event of an insurable loss to our generation assets. Side C cover, which insures the company against liabilities arising out of securities market conduct breaches, was also previously removed from our directors’ and officers’ insurance policy.
Climate change
For details of our key climate-related risks and how we manage them, please refer to our Climate Statement.
Growth and development
Growth and development projects are subject to risks that may affect expected financial returns or outcomes:
• major generation development projects during construction give rise to risks including cost overruns, commissioning delays, environmental impacts and employee/contractor safety
• political and regulatory uncertainty, high interest rates and poor economic conditions may limit our development choices or adversely affect the viability or costs of future developments.
Liquidity and earnings
A deterioration of our financial condition or instability in capital markets could increase our cost of capital, affect our ability to raise debt, or reduce our cash liquidity thereby impacting our financial performance, pursuit of our strategic objectives or result in insolvency.
The Crown’s shareholding and the provisions of the Public Finance Act limits our ability to raise equity capital.
There is a risk that foreign currency or interest rate movements may impact our earnings by increasing the cost for imported goods and services and the cost of debt.
People
Attracting, developing, and retaining capable and adaptable people who can contribute to our strategic priorities and grow with our business remains a focus for Mercury. We also face the challenge of an aging workforce in several key operational areas and attracting suitable people remains an area of risk.
RISK MANAGEMENT FRAMEWORK & RAAC RESPONSIBILITIES
Risk management is an integral part of our business. Responsibility starts with the Board who oversee that effective audit, risk management, and compliance systems are in place and monitored to protect Mercury’s assets and to minimise the possibility of operating beyond legal or regulatory requirements or beyond acceptable risk parameters. The Board delegates this oversight responsibility to the Risk Assurance and Audit Committee (RAAC).1
The RAAC’s Charter sets out the role, responsibilities, composition, structure, and procedures of the Committee. The Charter provides guidance for the effective oversight of risk assurance and audit matters by the Committee on behalf of the Board.
Mercury has an overarching Risk Management Policy in place (see the Corporate Governance section of
The RAAC oversees the overall audit, risk management, and compliance systems. The Board delegates responsibility for certain people-related risks to the People and Performance Committee (e.g. culture and psychological safety).
ASSURANCE & MANAGING RISK CONTINUED.
our website) supported by a suite of risk management tools appropriate for our business, including our Risk Appetite Statement, the Mercury Code, an Energy Markets Risk Management Policy, a Treasury Policy and a Delegations Policy.
The purpose of the Risk Management Policy is to embed a comprehensive, holistic, Group-wide capability in risk management, which provides a consistent method of identifying, assessing, controlling, monitoring, and reporting existing and potential risks to our business and its plans. The Policy sets out the risk management objectives and requirements of Mercury within which management is expected to operate. The Policy applies to all business activities of the Group including Mercurycontrolled joint ventures and is reviewed annually by the RAAC and approved by the Board.
The risk management framework supports a comprehensive approach to risk, encompassing financial, strategic, environmental, operational, regulatory, reputational, social and governance risks. This approach includes assessing and managing climate-related risks.
The framework involves actively identifying and managing risk and taking measures to reduce the likelihood of risk, contain potential hazards and take mitigating action to reduce impacts in line with risk tolerances. This approach is consistent with the precautionary principle.
We must accept some risks to achieve our strategic objectives and to deliver shareholder value. Our tolerance for risks is embodied in our Risk Appetite Statement which are set and regularly reviewed by the Board. As part of the current Risk Appetite Statement, Mercury targets a long-term credit profile of BBB+ (bbb on a stand-alone basis) from S&P Global (or its equivalent).
We have a Risk Assurance Officer who has the independence to determine the effectiveness of risk management, assurance and internal audit. The Risk Assurance Officer has a dual reporting line to the Chief Financial Officer and the RAAC Chair. The RAAC tasks the Risk Assurance Officer to ensure healthy and robust debate and interaction between management, risk assurance and audit providers.
Our management operates a Risk Management Committee, whose mandate is to establish, promote and implement risk awareness and adequate risk management controls to all staff. It also aims to monitor and review risk activities as circumstances and our strategic and operational goals change. Membership of the Risk Management Committee is made up of representatives from the Executive Management Team and is chaired by the Chief Executive. The Risk Management Committee meets at least quarterly.
In addition to these risk management processes, several measures are employed to manage risks. These include employee awareness, incident training, due diligence, financial risk mitigation tools, active involvement in the regulatory environment and established whistle blower policy and procedures.
As noted above, the RAAC is responsible for overseeing, reviewing and providing advice to the Board on Mercury’s risk management policies and processes. The Risk Assurance Officer reports regularly to the RAAC on the effectiveness of our management of material business risks. In addition, the RAAC annually reviews the risk management framework. The last review of the risk management framework took place in May 2024.
Mercury’s Constitution, and relevant Charters and Policies are available in the Corporate Governance section of Mercury’s website.
ENGAGING WITH INVESTORS.
OUR INVESTOR RELATIONS PROGRAMME
We are committed to open and effective communication with our stakeholders and owners by providing comprehensive relevant information. We take the steps set out in our Market Disclosure Policy to achieve this.
We communicate with our investors in various ways, including the Investor section of our website, annual shareholders’ meetings (ASM) and webcasts, our annual and interim reports, regular information disclosures, and analyst and investor briefings and road shows. Our aim is to clearly communicate our strategic direction, including articulating our strategic priorities and how these leverage our competitive advantages.
We also run a programme to build understanding and appropriate measurement of our performance among investors and research analysts. That programme aims to be responsive, clear, timely, consistent, evenhanded and accurate, and is designed to ensure appropriate access to management and directors.
Summary records of matters discussed at meetings with investors and analysts are kept for internal use, unless a recording or transcript of the presentation is published on our website.
WEBSITE
Our website contains a comprehensive set of investorrelated information and data including stock exchange and media releases, interim and annual reports, investor presentations and webcasts, and shareholder meeting materials. We will continue to build environmental, social and governance (ESG) website content to meet the increasing demand for transparent disclosures of its performance across these areas and the management of long-term risks and opportunities.
Shareholders can direct questions and comments to Mercury through the website or contact investor@mercury.co.nz.
GOVERNANCE ROADSHOW
Mercury held a series of investor meetings during June 2024, primarily with institutional investors. The governance roadshow aims to provide an overview of Mercury’s activities and significant governance matters during the year. Materials from the roadshow can be found on our website.
ANNUAL SHAREHOLDERS’ MEETING & WEBCAST
An ASM is held in New Zealand at a time and location which aims to maximise participation by shareholders. Mercury’s 2024 ASM will be held in Auckland on 19 September 2024 and once again will be held in a hybrid format (in person and online). This approach was successful at the 2022 and 2023 ASMs and is considered by the New Zealand Shareholders’ Association as the most effective approach to enable meaningful shareholder participation.
ELECTRONIC COMMUNICATIONS
We encourage shareholders to provide email addresses to enable them to receive shareholder materials electronically. Communicating electronically is faster and more cost effective. Most of our shareholders receive information electronically. However, we understand that this does not suit everyone. We also provide a hard copy Integrated Report to shareholders who wish to receive it.
ACTING ETHICALLY & RESPONSIBLY.
TE NGĀKAU TAPATAHI ME TE HAEPAPA.
The Mercury Code and the policy framework described below support our promises to each other and define our commitment to our customers, our people and community and our investors. The Mercury Code, Modern Slavery Statement, and all Policies referred to in the table on the following page are available on the Corporate Governance section of our website.
THE MERCURY CODE
Mercury people strive to do what’s right. We have put in place the Mercury Code to ensure that our people know what the ‘right thing to do’ is. The Mercury Code is our version of a code of conduct and ethics and documents the behaviours we require to embed and sustain our culture to successfully deliver our strategy and achieve our Purpose of taking care of tomorrow: connecting people and place today. The Mercury Code underpins everything we do. It requires all Mercury people, including directors and employees, to act honestly and with integrity and fairness at all times, and to strive to foster those standards within Mercury.
A Mercury employee is expected to apply the Mercury Attitude. This attitude shapes our decisions, our actions and our interactions with each other. Our Mercury Attitude aligns our direction to achieve our Purpose.
The Mercury Code is reviewed by our Board at least every two years. All Mercury employees are required to complete an annual re-certification training on applying the Mercury Code. This is an interactive e-learning module which tests employees on their understanding of applying the Mercury Code in different situations. A 100% score is required to pass the module.
Directors are required, in the performance of their duties, to give proper attention to the matters before them and to act in the best interests of Mercury at all times.
SUPPLIER CODE OF CONDUCT
We also want to ensure that we work with suppliers who share our commitment to acting ethically and doing the right thing. Our Supplier Code of Conduct describes the way we work with our suppliers and what we expect in return. The Supplier Code of Conduct includes our commitments and our expectations in relation to social responsibility, health and safety, compliance with all applicable modern slavery laws, environmental responsibility, and business integrity.
MODERN SLAVERY
Mercury acknowledges the importance of assessing and addressing the risk of modern slavery in our operations and supply chain. We continue to publish a modern slavery statement, consistent with the Australian Modern Slavery Act 2018. Our FY23 statement outlines the work undertaken during FY23 to assess and address the risk of modern slavery in our operations and supply chain and identified the following key focus areas for FY24.
The areas set out in the table on the next page are of fundamental importance to Mercury to ensure good governance and responsible business practices are followed.
Exploring possibilities. Te wherawhera i ngā āheinga.
CARE / TAURIMA
Doing what's right. Te mahi i te mea tika.
Taking ownership. Rangatiratanga.
Working together. Te mahi tahi.
COMMIT / KĪ TAURANGI
CONNECT / HONONGA
CURIOUS / PĀKIKI
ACTING ETHICALLY & RESPONSIBLY CONTINUED.
Our Governance and Responsible Business Practices
Conflicts Conflicts of interest must be avoided, except with the prior consent of Mercury. Mercury people are required to declare conflicts of interests and are encouraged to proactively discuss potential conflicts with their manager. Mercury takes practical, preventative action wherever possible, for example by substituting project managers in circumstances of possible conflict with contractors and suppliers.
Our directors declare all potential conflicts of interest prior to appointment and if applicable, at each Board meeting in relation to specific agenda items.
Bribery The acceptance of bribes, including gifts or personal benefits of material value which could reasonably be perceived as influencing decisions, is prohibited under the Mercury Code. Under Mercury’s Delegations Policy, donations to political parties are prohibited.
Use of Mercury Assets
The Mercury Code places restrictions on the use of corporate information, assets and property. All persons covered by the Mercury Code are encouraged to report any breach or suspected breach of the Code.
Whistleblowing We provide a framework for the protection of employees wishing to disclose serious wrongdoing. This is described in Mercury’s Whistleblowing Policy.
Employees are also encouraged to voice with their manager, the HR team, the General Counsel, other managers or directors any concern over ethical or irresponsible behaviour, even if not reaching the threshold of serious wrongdoing.
Our Governance and Responsible Business Practices
Market Disclosures
Our Market Disclosure Policy ensures we maintain a fully informed market through communication with the markets, investors and stakeholders and by giving them equal and timely access to material information.
Privacy We are committed to the safeguarding and proper use of personal information. We have a comprehensive Privacy Policy, which is reviewed every two years, and a robust privacy framework. Privacy is afforded significant consideration within Mercury and is managed in accordance with our risk management framework.
Our General Counsel is Mercury’s Privacy Officer and is responsible for implementing our Privacy Policy, promoting awareness of privacy matters, monitoring matters on a day-today basis, and escalating matters as required to our Chief Executive, with notification to our Risk Management Committee. Privacy issues are reported to the Risk Management Committee on a quarterly basis. We also have a Group Information Security Manager who is responsible for ensuring that appropriate systems and processes are in place for the storage and security of personal information.
Sustainability
Trading In Company
Mercury’s Trading in Company Securities Policy sets out the rules and restrictions relating to trading in Mercury securities by directors, employees and contractors, including the prohibition on insider trading. The Policy is closely monitored by the Company Secretary and is overseen by the RAAC.
The Chief Executive and EMT members are prohibited, by the Trading in Company Securities Policy, from entering into transactions in associated products which limit the economic risk of participating in unvested entitlements under Mercury’s Long-Term Incentive Plans.
During FY24, the Trading in Company Securities Policy was updated to clarify the application of trading restrictions to people associated with Mercury restricted persons.
Environmental
Our Sustainability Policy sets out the core principles and values that promote ethical and responsible decision-making.
Under the Policy, we commit to integrating sustainability through principles relating to our five-pillar strategy: Customers, Partnerships, Kaitiakitanga, People, Commercial.
Our Environmental Policy recognises that our generation activities rely on access to natural resources that we know are highly valued by our communities. We strive to maintain this trust by working with partners to deliver renewable electricity and make a long-term difference New Zealand’s environmental health.
We work responsibly to deliver today and sustainably for future generations and will achieve this by focussing on: Kaitiakitanga, challenging our performance, promoting awareness, complying with requirements, and setting objectives and targets.
Takeover Response Policy
We have a Takeover Response Policy to guide the Board and management if the Company receives a takeover notice or the Company becomes aware that a takeover offer in respect of the Company (or an analogous scheme of arrangement) is, or is likely to be, proposed by another person.
DIVERSITY, EQUITY & INCLUSION.
REREKĒTANGA, MANA ŌRITE ME TE WHAKAURU.
Mercury embraces and celebrates diversity in all its forms. When we care, commit, connect and bring our curiosity, we make a real difference.
Being inclusive of individuals with different backgrounds, views, experience and capability working together makes us stronger as an organisation. We are committed to recruiting and retaining people who respect each other, our customers, our stakeholders and our partners and have a broad range of skills, experiences and frames of reference to drive innovation, deliver improved financial performance and help us to achieve our ambition.
Our commitment to diversity, equity and inclusion starts with our Diversity, Equity and Inclusion Policy and framework. A copy of this policy is available in the Corporate Governance section of our website.
Our approach takes a strategic view that to build diversity, equity and inclusion in our organisation we must align a variety of initiatives. These initiatives aim to enable and involve our people, build external partnerships, grow capability, and ensure our work environment and structure support a diverse, equitable and inclusive culture. The activity we undertake across these areas of focus is aligned to the following principles:
• pursue diversity of our people at all levels;
• create a flexible and inclusive work environment that values difference and enhances business outcomes;
• harness diversity of thought and capitalise on individual differences;
• embrace leadership behaviours that reflect our belief in the value of diversity, equity and inclusion;
• attract and retain a talented workforce through increasing the diversity of the candidate pool and maintaining a recruitment strategy that is attractive to all candidates, and
• recognise the importance of investing in creating a greater sense of belonging for our people.
This approach will be achieved across by:
• providing learning opportunities that raise awareness of the benefits of diversity, equity and inclusion, improve understanding of the biases that hinder progress, and support leaders to create safe, supportive, and equitable spaces where team members of all backgrounds and experiences belong;
• ensuring our recruitment and selection, development and talent management approaches are equitable and enable inclusion and diversity at all levels;
• regularly reviewing and enhancing processes and policies to encourage greater flexibility and diversity and enable an inclusive and equitable environment where everyone can belong;
• embedding diversity, equity and inclusion in our culture through engaging internal communications and events, active employee led network groups that promote awareness, and seeking diverse perspectives on issues that matter to our people;
• regularly tracking progress towards a diverse workforce at all levels against specific targets;
• engaging with educational institutions and partners in our communities to address inequity and promote and encourage wide talent pools for the industry;
• reporting on our progress to the Board and holding ourselves to account.
In addition to the actions we undertake, we also support a diverse, equitable and inclusive workplace through not permitting or condoning any harassment, discrimination or victimisation. Our Anti Bullying, Harassment and Discrimination Policy outlines our approach to this.
Our progress against diversity and inclusion goals is measured against objectives set by the Board. These objectives are made up of a mixture of targets and benchmarks. Generally, targets exist where we believe that achieving diversity in that area is aided by us working towards a specific measure. In other areas, we use benchmarks where comparison against those identified data points will help inform our view of how our work towards diversity in that area is progressing.
Diverse
DIVERSITY, EQUITY & INCLUSION CONTINUED.
Objectives
Gender
We have clear and simple targets for gender diversity of 40:40:20 at all levels.
This means we aim for a minimum of 40% female and 40% male, with the balance being any gender.
Pay Equity
We ensure that everyone is rewarded fairly for their work.
Ethnicity
Aligned to our goal of having clear and simple targets, we have simplified long-term targets for ethnicity of 15:15:10. This means we aim for a minimum of 15% Māori, 15% Asian and 10% Pasifika at all levels (these are closely aligned to our population demographics and are minimums).
Age
To ensure our business is diverse in a range of ways, we monitor our age profile to check that we are aligned to the national median. The median age of the NZ workforce is 41.8 years (National Labour Force projections, 2023). Benchmark against national median age ofthe labour force in New Zealand National Labour Force projections.
At 30 June 2024, the proportion of women on the EMT (who represent Mercury's Officers, including the Chief Executive) was 28.6%, or two out of seven (as at 30 June 2023 this was 37.5% or three out of eight). The proportion of women on the Board at balance date was 37.5%, or three out of eight, including the Chair (as at 30 June 2023 this was 50%, or four out of eight). No Directors or EMT/ Officers self-identify as gender diverse (also the case as at 30 June 2023).
In order to maintain consistency of measurement against our targets, we have adopted the Stats NZ prioritised ethnic groups. This involves each person being allocated to a single ethnic group based on the groups they have identified with, which are, in order of priority: Māori, Pacific, Asian and European/Other.
At 30 June 2024, our gender pay equity was 96.7% (as at 30 June 2023 this was 97.1%). Gender pay equity is calculated as the average position in range (relative to the role’s band midpoint) of female fixed remuneration compared with the average position in range of male fixed remuneration. Our gender pay gap which compares the median hourly rate between males and females was 37% (as at 30 June 2023 this was 41.9%).
Pay equity by ethnicity compared to “other” ethnicity was Māori 98.8%; Asian 98.2% and Pasifika 96.7% (as at 30 June 2023 this was Māori 99.9%; Asian 98.6% and Pasifika 97.6%). The ethnicity pay gap which compares the median hourly rate between each ethnicity and “other” ethnicity was Māori 22.2%; Asian 2% and 37.9% for Pasifika (as at 30 June 2023 this was Māori 32%; Asian -2.7% and Pasifika 37.7%).
The Board believes that for this reporting period Mercury has continued to make progress towards achieving our inclusiveness, equity, and diversity objectives. However, the Board notes that continued focus is required.
NZX CORPORATE GOVERNANCE CODE INDEX.
2.1
c.
4.1 Continuous disclosure policy Acting Ethically & Responsibly Our Governance and Responsible Business Practices, p17
4.2 Code of ethics, charters and policies on website Acting Ethically & Responsibly www.mercury.co.nz/investors/corporategovernance The Mercury Code & Our Governance and Responsible Business Practices, p16-17
4.3 Balanced, clear and objective financial reporting FY24 Integrated Report Notes to the Consolidated Financial Statements p41-61
4.4 Non-financial disclosure FY24 Integrated Report Climate Statement p62-84
Principle 5 - Remuneration
5.1 Director remuneration policy FY24 Integrated Report Remuneration Report Director Remuneration, p115
As an exception to the NZX Corporate Governance Code, Mercury did not fully comply with Recommendation 5.1 for part of the reporting period because we did not have a director remuneration policy for the whole period. Mercury is now compliant with Recommendation 5.1.
See the Remuneration Report for a full explanation of this exception.
5.2 Executive remuneration policy FY24 Integrated Report Remuneration Report Executive Remuneration, p105-114
5.3 CEO remuneration FY24 Integrated Report Remuneration Report Chief Executive’s Remuneration, p111-114
Principle 6 – Risk Management
6.1 Risk management Assurance & Managing Risk FY24 Integrated Report The Risks We Face Our Key Risks, Risk Management Framework & RAAC Responsibilities, p12-15 Our Key Risks, p16
6.2 Health and safety risks FY24 Integrated Report The Risks We Face FY24 Integrated Report Ngā Tāngata/People Our Key Risks, p16 Pursuing Safety Citizenship, p28-29
Principle 7 - Auditors
7.1 Audit framework Assurance & Managing Risk Audit Plan & Role of Auditor, p12
7.2 External auditor attends annual meeting Assurance & Managing Risk Audit Plan & Role of Auditor, p12
7.3 Internal audit Assurance & Managing Risk Internal Audit & Risk Assurance, p12
Principle 8 – Shareholder Rights & Relations
8.1 Investor website www.mercury.co.nz/investors
8.2 Shareholder communications Engaging With Investors p15
8.3 Right to vote FY24 Integrated Report Other Disclosures Information About Mercury NZ Limited Ordinary Shares, p126
8.4 Pro rata offers N/A during the reporting period
8.5 Notice of meeting See the Notice of Meeting for 2024 on NZX and posted on our website